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117-room Boutique Hotel Plan Approved for Downtown Wichita, Kansas

By Bill Wilson, The Wichita Eagle, Kan.McClatchy-Tribune Regional News

Sept. 14, 2011--The biggest project in the latest drive to revitalize downtown moved a step closer to reality Tuesday with City Council approval of a boutique hotel plan at Douglas and Broadway.

The Douglas Place plan for a 117-room, $150-a-night hotel, developers said, sets in motion the restoration of another iconic downtown building a block away -- the 40,000-square-foot former Henry's building at Broadway and William.

The City Council voted 5-1 Tuesday morning, with council member Michael O'Donnell opposed, to approve a package of public incentives for developers to rehabilitate the old Union National Bank Building, site of the historic 1958 Dockum sit-in.

The vote came after three hours of debate that included criticism that the city was too generous with taxpayer money and the developers were risking too little of their own money.

The project is the largest since the city approved Project Downtown -- its latest master plan for redeveloping downtown -- last December.

The council's approval should brighten prospects for that entire downtown block, where Slawson Investments owns the former Henry's building, said Jerry Jones, vice president of commercial development at Slawson.

Jones said the company plans to turn the building into space for retail and restaurants.

"It's all going to depend on finding users for that building," Jones said. "We've got some prospects looking at it now, and this approval today certainly helps move those conversations along."

That downtown block is a keystone for further development downtown, said Jeff Fluhr, president of the Wichita Downtown Development Corp.

"It will be initiating a number of significant projects that will enable future development in that area," Fluhr said.

The hotel vote

Council member James Clendenin said his constituents want to see new jobs created in Wichita.

"I see a significant investment from the developer, I see an investment in a parking structure and urban park by the city," Clendenin said. "All resulting in 100-plus however many jobs. That's all people ask me about. How many jobs? Tell me jobs. Jobs, jobs, jobs. People want to know about jobs... In my opinion, this project fills a void and a need in this city."

Specific jobs numbers and wages have not been made public.

Council member Jeff Longwell agreed with Clendenin.

"I've heard from a number of conservative developers in this town who've said 'good for them,' " he said. "This is a good investment for Wichita... I'm glad people are coming forward with more investment."

The Ambassador hotel project includes an urban park and a publicly financed $7.57 million 282-stall parking garage, with a minimum of 56 stalls available for general public use on weekday evenings, and 172 stalls available evenings and weekends.

O'Donnell objected to the $7.57 million price tag that taxpayers will pick up for the parking garage and park.

Paul Coury, a Tulsa boutique hotel developer who heads the development group including local developer Dave Burk and Dave Wells of Key Construction, said the financing package is necessary to make the hotel work.

He told The Eagle last week that without the incentives, nightly room rates would approach $250 to make the project financially viable, instead of the $150 target range for the project.

"You're doing an excellent job of being stewards in Wichita," Coury said, pledging that developers will indemnify the city on any financial risk it takes in an elaborate bonding plan that will cover the project's cost.

Coury defended the bonding and the financial incentives package, which includes tax increment financing, a community improvement district, historic tax credits, special assessments for facade work and $4.6 million in city capital improvement funds.

According to city documents, developers are contributing $7,715,000 in equity to the project. But $7.3 million of that will come from federal and state historic tax credits, city officials said.

"These programs are revenue neutral. They don't cost the city money. We as developers have agreed to guarantee all these mechanisms," Coury said.

Critics of decision

But a group of about 50 free-market proponents opposed the project, saying that any downtown development must be privately funded.

Several demanded that council members who have taken campaign contributions from Burk and Wells recuse themselves from the vote.

Others stood upon request to voice their displeasure with the proposed public-private partnership, including Sedgwick County commissioners Karl Peterjohn and Richard Ranzau.

"I support privately funded and market-driven development projects in downtown Wichita just like I support privately funded and market-driven development projects in every neighborhood of our city," said John Todd of Wichita, a frequent opponent of public-private partnerships.

"A couple of the owners of Douglas Place LLC (the Ambassador development group) are familiar names to everyone and have a long history of involvement in downtown development projects. I admire their ability and expertise at structuring highly sophisticated real estate transactions.

"The layering of multiple public financial incentive programs in the Douglas Place project is a masterpiece aimed at netting tremendous financial benefits for themselves."

In a move that brought laughter, Todd criticized the terms of the developers' retail lease in the parking garage, brandishing a $10 bill and offering it to City Manager Robert Layton,.

Douglas Place developers will lease the 8,400 square feet of space on the first floor of the parking garage for $1 per year for five years.

"Frankly, as a citizen, I would be offended if you accepted even my offer that doubles the lease payment you are considering for the Douglas Place developers today," Todd said.

Critics also panned the use of federal and state historic tax credits on the project.

"Federal and state money is still taxpayer money. It's still coming from us," said Clayton Coen of Wichita. "This is a perfect example of political cronyism. There are longtime friends of the people on this bench."


(c)2011 The Wichita Eagle (Wichita, Kan.)

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